New research by RiceWarner, commissioned by the SMSF Association, shows that the Australian Securities and Investments Commission’s cost estimates for SMSFs may still be out, despite an update earlier this year.
The SMSF Association will approach ASIC with the research that shows the cost of running an SMSF is likely not as high as the regulator suggests on their MoneySmart website.
Using anonymised data from super administrators SuperConcepts and BGL, RiceWarner found that SMSFs with balances of $200,000 or more are cost-competitive with industry and retail superannuation funds and SMSFs with balances of $500,000 or more are generally the cheapest alternative.
It also highlighted that, since the last report in 2013, fees for SMSFs, aside from regulatory levies, have actually fallen.
“We will just write directly to the chair or the acting chair [of ASIC and say] here is information we think you will find interesting,” SMSF Association CEO John Maroney told Industry Moves.
The regulator has previously given the association a good hearing, Maroney said, and he is optimistic they will amend information on the website – such as what can be found here - that suggests SMSFs do not perform as well as APRA-regulated funds and will cost, on average, $6152 a year to run.
Source: Cost of Operating SMSFs 2020
A previous ASIC fact sheet stated that the average cost of running an SMSF was $13,900 a year. That factsheet was expired earlier this year, partly on the lobbying of the SMSF Association.
Small fund drain?
As well as analysing the cost of SMSFs, the research examined the fate of smaller funds – those with starting balances under $50,000 – which are often accused of being a drain on trustees’ retirement resources.
“There is only a minority of the funds that actually stay in the range. The biggest single group are the ones that move above the range,” senior consultant at Rice Warner, Alun Stevens, said.